VSEs & SMEs: Optimize your sales and inventory management to bounce back in times of crisis

How can you rethink your sales processes, procurement methods and inventory management to ensure your long-term survival?

The economic consequences of this global health crisis are numerous, and will certainly lead to major upheavals in our consumption and distribution patterns.

Faced with this crisis, small businesses are often on the front line. Loss of business, supply difficulties, cash-flow problems: entrepreneurs are faced with multiple obstacles.

However, the strength of a VSE lies in its ability to adapt. If the coming months are going to be difficult, agility, professionalism, organization and creativity will make them more resilient in the face of this crisis. It's also in times of crisis that new opportunities are created.

Some businesses are hard hit, others less so, depending on their sector and distribution model. Measures have been put in place by the government, and everyone should be able to take advantage of them to alleviate the emergency.

In the second stage, it's a question of knowing how to question one's organization and methods, through a global analysis. For companies that sell goods, certain actions can help to improve their business model, streamline their customer/invoicing cycle and inventory management, and exploit new opportunities. We'd like to suggest a few best practices that will maximize your chances of weathering the storm and bouncing back faster.

See all software Stock Management

Turn inventory into your best ally

Even more sensitive in times of crisis, inventory management is a crucial element on which you can act. Whatever the size of your company and whatever your sector of activity, don't overlook the impact of good inventory management and optimization.

Here are a few recommendations to implement quickly during this period:

▶️Analysez your existing stock: first and foremost, you need to know exactly what your stock consists of: product references and categories, quantities of each, storage location. A detailed inventory will give you a clear picture of what's already there.

▶️Déterminez inventory valuation: this second step is essential, as inventory is a capital asset. It increases your WCR (Working Capital Requirement) and directly affects your cash flow. A good analysis will help you make the right decisions.

▶️Calculez your production costs and identify high and low-margin items: because the profitability of your business is critical, you need to be fully capable of identifying the products that make the most money. Your sales strategy will depend on it.

▶️Réduisez Dormant stock : unsold goods are a burden on your business, adding unnecessary costs. It is possible to develop promotional actions or even consider very short-term destocking solutions.

▶️Révisez your product portfolio: just as you've identified unsold items, identify fast-moving items and best-sellers. This is an opportunity to reduce the breadth of your product range, simplify your offer and focus on certain products.

▶️Assurez traceability of your products : certain activities require legal tracking of their merchandise. For hazardous, perishable or medicinal products, the use of batch or serial numbers ensures permanent tracking and improved reactivity.

▶️Organisez and clarify your product management : your organization during a crisis must be flawless. When you take over, your management will make all the difference.

If you haven't already set up SKUs for better tracking, now's the time! Setting up product categories can also prove useful for better analysis (e.g. accessories, clothing, organic, etc.). What's more, have you also considered adopting barcodes in conjunction with a shower/scanner to speed up orders and their processing? And last but not least, if you have a large warehouse or storage area, think about creating storage spaces that will make it easier to pick up products before they are dispatched.

Optimize and automate your sales management

As the economy recovers more than ever, the way you handle your sales management will be crucial to getting back on track quickly and efficiently.

Reviewing your sales processes means :

• Reducing the risk of errors and preserving customer relationships,
• Improving profitability and productivity,
• Saving time and focusing on your core business,
• Accelerate cash flow.

How do you go about it? Here are a few simple steps you can take:

▶️Faites sort out your product catalog: as already mentioned, review your product database, classify and analyze best-sellers, and don't hesitate to clean up! But you can go even further by creating product kits or promotional offers. You can also try to speed up product availability by anticipating certain stages, a process known as delayed differentiation.

▶️Automatisez the sales chain: Abandon unmanageable spreadsheets! Optimize your operations and sales cycle by automating and centralizing all your data and orders in a single system. You'll be able to transform quotations into purchase orders and invoices in the blink of an eye, without errors.

▶️Restez close to existing customers: they're at the heart of your business. Keeping them up to date with your news will help them think of you when they're ready. To maintain the link, don't hesitate to review your customer file, updating data, addresses, email addresses, etc. Centralize their information, classify it and establish different commercial conditions to reward your best customers and encourage greater loyalty.

▶️Créez sales opportunities: think about the different alternatives you can put in place to boost your sales activity. Here are just a few:

• Offer consignment sales: this system allows you to display your products with a retailer who pays you only when the merchandise is sold. This means greater visibility for your products and less risk for your customer in offering your products.
• Implement marketing actions: add rhinestones and sequins to your products to make them more attractive and competitive. Think about proposing commercial offers and attractive packages, such as a set with a gift or a kit with free POS to facilitate sales.
• Adopt new distribution channels: an omnichannel strategy is particularly beneficial in times of crisis, as it allows you to diversify your sales channels. Consider new ways of selling: e-commerce, trade shows, sales agents, clearance centers, boutiques, pop-ups, marketplaces...
• Establish detailed sales reports: identify the best distribution channels, sales locations, sales representatives, customers, products... In short, track your key indicators and draw conclusions from them to focus your efforts at the right time and in the right place.

▶️Favorisez collaboration with your teams: a motivated, well-equipped team is an essential asset for your business:

• Adopt easy-to-use tools that will help your employees become more efficient and better serve your customers.
• Train your teams in better business practices by providing mobile tools.
• Create centralized work universes for each employee, with personalized access to their data.

Rethink your supply chain

Inventory plays a critical role in the long-term viability of your business. As we've explained, it ties up your cash and increases your WCR. That's why it's essential to manage your supplies to optimize inventory levels and costs. But beware: this doesn't mean putting all your purchases on hold, as under-stocking could lead to lost sales and dissatisfied customers when you start up again.

Here are 7 recommendations for improving merchandise sourcing during this crisis and post-crisis period:

▶️Gérez your existing supplier orders: take stock of your current supplier orders, whether pre-orders, partially received orders or orders received but not yet settled. Work with your suppliers to modify or cancel certain orders, and stagger deliveries. This is also an opportunity to negotiate payment terms.

▶️Analysez your current production: for designers and manufacturers, think about reviewing your production. It may be appropriate to cancel or postpone certain planned productions, and consequently adjust the purchase of raw materials. Wherever possible, you should also try to reduce production time, so as to reduce your work-in-progress.

▶️Cherchez to move towards just-in-time inventory management: the aim of this method is to accelerate stock rotation. This means minimizing the time elapsing between receiving products and shipping them back to your customers. This reduces the cost of stocking goods. Beware, however, of the additional delivery costs this method can generate.

▶️Évitez stock-outs on your flagship, high-margin references: these products are essential to your company's survival.

• Calculate your reorder point: often used in conjunction with the just-in-time model, the reorder point or replenishment threshold method consists of defining a stock level for each product which, once reached, triggers a replenishment order with your supplier.
• Create low stock notifications: if you use stock management software, you can set up alerts to notify you when your stock levels are low. This way, you can place a new order with your suppliers.

▶️Optez for dropshipping: Products are shipped directly from your suppliers to your customers. This means you don't have to stock the merchandise you sell.

▶️Évaluez your supplier base: in times of crisis, too much dependence on a few suppliers can be risky if some of them can no longer deliver or are forced to close down. It can also be a good idea to find local distributors. In this way, you can avoid delivery problems and support local businesses. Local solidarity is often much appreciated in difficult times, and can become a competitive advantage. Ensuring the delivery of flagship, high-margin products is also essential.

▶️Optimisez your purchases: in the end, we recommend that you seek to minimize the total annual cost of your merchandise in stock. This means defining the optimum point between order acquisition costs and stock holding costs. To do this, you can use the EOQ (Economic Order Quantity) calculation.

See all software Stock Management

Act now to bounce back!

Don't delay in taking action to ensure your long-term survival during the crisis and facilitate post-crisis recovery.

Now more than ever, cash flow is the lifeblood of your business, and monitoring your working capital requirements is vital. Make sure you don't tie up too many resources in your inventories, the primary threat to working capital for trading companies. Inventory and order management software will enable you to manage and control your stock efficiently and without error.

Managing trade receivables and payables is also essential for optimizing working capital. Choose your suppliers carefully and organize your purchases. On the customer side, automate your order processing and collection operations to improve your "Order to Cash" process and get paid faster. Crucial for healthy cash flow!

Sponsored article. Expert contributors are authors independent of the appvizer editorial team. Their comments and positions are their own.